Tag: profits

By on May 13, 2019

Having already announced plans to cut thousands of jobs in Europe in an effort to stem the region’s ongoing cash hemorrhage, Ford has reportedly begun re-examining the United Kingdom. Initially, the automaker’s restructuring plan involved ending production at a transmission plant in France, killing the C-Max in Germany, and dissolving its Ford-Sollers joint venture in Russia.

While Ford hoped to shed as many employees as possible through voluntary retirement, it acknowledged it would have to fire at least 5,000 people in Germany and an unspecified number of U.K. citizens in March. The company hasn’t settled on a figure, though inside sources claim it should be no more than 550 jobs — all of which should be of the non-manufacturing variety.  (Find Out…)

By on May 12, 2019

Subaru may be getting too big for its britches. Despite seeming like it was positioned for nearly incalculable growth at the start of last year, the automaker’s latest financial report showed the period was actually plagued with problems. Over the full fiscal year, which ends on March 31st for Subaru, the company basically showed that its operating profit had been cut in half.

How could this have happened? Subaru’s commitment to all-wheel drive has given its sales a shot in the arm as the crossover craze has escalated and it has one of the best reputations in the business. Seriously, ask any automotive layperson what they think of the brand and they will almost always have something positive to say. However, for all of its presumed advantages, the company is reporting a 48.5-percent decline in operating profit (to 195.5 billion yen) and a 6.3-precent loss of global sales volume.  (Find Out…)

By on April 30, 2019

General Motors’ first-quarter earnings report revealed turmoil in international markets and a shrinking presence in North America, but net income rose to $2.1 billion, up from $1.1 billion a year ago, and adjusted earnings per share ($1.41) beat out estimates of $1.11. Still, that wasn’t enough to stop its stock from sliding in pre-market trading, as revenue of $34.9 billion undercut analyst estimates of $35.28 billion. Pre-tax earnings fell 11 percent.

In its report, GM wanted to talk about trucks. You know the ones — the revamped 2019 Silverado and Sierra 1500 crew cabs, now featured in half of the pop-up ads on your author’s computer and phone, advertising 0% financing. (Find Out…)

By on April 26, 2019

Automakers find themselves a bit of a pickle right now. The shift towards “mobility” has resulted in high development costs for electric and autonomous vehicles in the midst of stagnating sales growth. There’s also a trade war hurting global demand and impacting supply chains. Ultimately, this resulted in a lackluster Q1 for many manufacturers.

Ford’s situation was symbolic of the industry’s general plight, per its 34-percent decline in net revenue for the first quarter of 2019, but it wasn’t without a warm ray of hope. The company posted a 12-percent increase in earnings (before before interest and taxes) over the same period due to North America’s consistent desire to own SUVs, crossovers, and pickups. Ford’s share price also improved, hitting the $10 mark for the first time since August of 2018 on Friday.

With all that good news, many probably wonder what caused net revenue to climb into the toilet like an overly curious ferret. As it turns out, saving money can be pretty expensive.  (Find Out…)

By on April 8, 2019

U.S. light-vehicle dealers reported an operating loss for the first time since the National Automobile Dealers Association (NADA) began collecting data in 2009. While everyone continues reporting pretax net profits, concerns are beginning to swell around their dependency on factory incentives, which are not included in operating tabulations.

NADA’s analysis of 2019’s first-quarter auto sales shows that incentive spending is down compared to the same period a year ago. The group expects above-average discipline from automakers in terms of incentive spending throughout the year. According to J.D. Power, average incentive spending per unit was down $119 to $3,821 through March 2019 — with the brunt of that going toward trucks. However, if sales remain low, spending may creep back up to help clear out languishing inventories.  (Find Out…)

By on March 13, 2019

Volkswagen Group just announced a restructuring plan aimed at raising the company’s operating margin to 6 percent. Unfortunately, the strategy involves a staffing reduction of up to 7,000 individuals by 2023 — with the automaker saving an estimated 5.9 billion euros in the process.

While legitimate layoffs aren’t expected to take place for at least a few more years, VW claims the “automation of routine tasks” will make the jobs unnecessary, adding that the staffing cuts could be done by simply not replacing employees who take an early retirement package.  (Find Out…)

By on February 11, 2019

Subaru’s sales in the United States effectively tripled in the past decade, making it the most important market for the brand by a wide margin. However, the automaker has had to expend quite a bit of energy in its home country of Japan to address recalls and regulatory scandals over the last few years.

While the duality hasn’t caused issues on a global scale, many observers wonder how long its good fortune will last. In America, Subaru is a feel-good brand that uses love as a core marketing concept to improve sales. In Japan, it has become synonymous with overworking employees lacking compensation, regulatory scandals, sudden work stoppages, and recalls. Many believe it’s only a matter of time before Subaru of America will have to contend with Japan’s issues, and evidence exists that problems are already beginning to surface in the West. (Find Out…)

By on September 13, 2018

Just a year ago, Volkswagen Group announced it wasn’t just going to build a series of standalone electric car models — it wanted an EV version of every model in its stable. The automaker may as well have tried buying the rights to the Green Giant mascot from B&G Foods, too.

A year later, former CEO Matthias Müller’s replacement is discovering that lofty promises don’t come cheap. The automaker’s goal is well out of reach, unless it starts making more money. (Find Out…)

By on July 27, 2018

Ford badge emblem logo

In an earlier analysis of Ford’s lackluster share price, we noted that Europe and China posed a significant problem for the automaker’s bottom line. Europe, which was previously pretty good to the brand, has gradually lost its share of the market since 1994. While Ford still moves a lot of metal in the region, something’s definitely wrong.

On Wednesday, Ford announced that its European operations had endured a $73 million second-quarter loss. It’s anticipating a full-year loss in the region after earning $234 million last year. “We’re extremely dissatisfied with our performance in Europe,” said CEO Jim Hackett.

Something has to be done to avoid further setbacks. According to Jim Farley, Ford’s head of global markets, the clear remedy is concentrating on vans and crossovers because that’s where the money is. It’s a similar strategy to what’s being done in the United States, where Ford eventually aims to cull the lineup to a point where the Mustang is the only vehicle that qualifies as a traditional car. But is it the correct one, considering how we’ve arrived at this point?  (Find Out…)

By on March 26, 2018

Ford Escape Titanium badge logo, Image: Ford Motor Company

Ford Motor Company has a lot invested in Europe. While the continent spent decades operating facilities under the lose leadership of Ford of Britain, Detroit acquired direct ownership in 1950. From there it extended its influence dramatically, buying up established European manufacturers near the close of the 20th century. But things haven’t always been good; economic hardships have been par for the course and things haven’t been easy in a long time.

Presently, Ford makes around $75,000 in profit for each of its employees in the United States. In Europe, that number is about $4,300 per worker. While we’re sure that makes domestic line workers feel entitled to a small pay increase, the point is that the profit margins across the pond are pretty slim for Ford.

However, unlike General Motors, the company doesn’t want to abandon the region. The automaker says it’s taking a renewed interesting in figuring how to keep profits up and is avoiding any speculation that it might duck out of Europe entirely. But let’s revisit its hardships over the last decade so we can establish a framework for why Ford is having a rough go of it.  (Find Out…)

By on February 12, 2018

2018 ford expedition fx4, Image: Ford Motor Co.

For an automaker worried about shrinking profit margins, spending an extra $25 million is just fine if it means cranking out 25 percent more high-margin SUVs. And the Ford Expedition and Lincoln Navigator, now minty fresh after years spent withering on the vine, certainly fit the description of “guaranteed cash generator.”

Ford plans to add that sum to the $900 million already sunk into the Kentucky Truck Plant in an effort to boost production of its full-size SUV models, knowing full well Americans buyers will snap them up the minute they roll off the line. Is there a clearer example of an automaker treating SUVs as a license to print money? (Find Out…)

By on October 26, 2017

Ford Super Duty Limited

Ford Motor Company’s eagerness to quench North America’s insatiable thirst for light-duty pickups and SUVs drove the company to earn $1.6 billion in the third-quarter of 2017, according to an earnings report from Ford.

Also helping boost the automaker’s bottom line were some tasty foreign tax credits and an accountant’s best friend: cost reductions.

(Find Out…)

By on October 21, 2017

All-New Mitsubishi Eclipse Cross Compact SUV - Image: Mitsubishi

Last year, Nissan answered Mitsubishi’s prayers by purchasing a majority stake in the struggling Japanese automaker. The company had started out strong in North America at the dawn of the 20th century, with U.S. sales topping 345,000 in 2002. Six years later, volume had fallen by nearly 85 percent.

Mitsubishi was a dead brand walking, at least on these shores.

Now adopted by a wealthy parent, Mitsubishi has access to Nissan’s technology and platforms, but don’t expect the two automakers to start joint production of new products anytime soon. Only two new models — one with a horrible name, the other a long-delayed niche vehicle — will appear in showrooms before the end of the decade.

Still, Mitsubishi is planning for a 30-percent bump in U.S. sales by early 2020. Product isn’t the sole player in the company’s new growth strategy. (Find Out…)

By on September 25, 2017

2017 Ford Taurus

Ford’s new CEO, Jim Hackett, has been milling around the company trying to get a sense of what the automaker needs to thrive in today’s car market. Conducting a summer-long assessment of the company’s current status and action points, Hackett is setting himself up with a greater understanding of where Ford stands in order to share his vision of the automaker’s future with investors in early October.

However, we already have some sense of what that future entails. Hackett has already spoken with leadership from the United Auto Workers, easing union fears that he might try to clean house and cut jobs. But his reassurance that there probably won’t be massive layoffs under his leadership doesn’t guarantee low-margin automobiles won’t be at risk.

This isn’t entirely down to Hackett’s management style, either. Investors were becoming annoyed with former CEO Mark Fields’ lofty long-term strategy, which featured fewer near-term goals aimed at bolstering profitability. Some analysts expect Hackett to end production of models that aren’t big earners — which includes just about everything that isn’t an SUV, crossover, or pickup truck. (Find Out…)

By on September 13, 2017

Concept EQ, Exterieur Concept EQ, exterior

Everyone’s doing it. It’s as popular as the fidget spinner and Pokémon Go crazes all those years months ago. In a rush to signal their environmental bonafides and display their dedication to the Next Big Thing, luxury automakers are tripping over themselves in an effort to promise an all-electrified model lineup as soon as technology and finances allow.

This time, it’s Mercedes-Benz. The world’s oldest car brand doesn’t want its rivals cashing in once governments around the globe start turning off the fossil fuel taps. So, earlier this week, Daimler CEO Dieter Zetsche stepped up and made a promise we’ve heard ad nauseum as of late: every model in the brand’s lineup will soon sport some form of electric propulsion, be it a hybrid setup or full-on battery electric powertrain.

For Mercedes-Benz, this means 50 hybrid or EV models, including at its irrelevant-to-Americans Smart brand. The move isn’t without a steep cost, however — Daimler is bracing for a slashing of vehicle profit margins. In some cases, the green collected from green cars could be half that of a gasoline Benz. What to do? (Find Out…)

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